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2004

SUN MIN v. HONG KONG MING WAH SHIPPING CO LTD

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46640-EN-2005-10-17

SUN MIN v. HONG KONG MING WAH SHIPPING CO LTD

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CACV 37/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 37 OF 2004

(ON APPEAL FROM HCLA NO. 9 OF 2003)

______________

BETWEEN

SUN MIN (孫敏) Claimant
(Respondent)
and
  HONG KONG MING WAH SHIPPING CO. LTD (香港明華船務有限公司) Defendant
(Applicant)

______________

 

Before:  Hon Yeung, Tang JJA and Yam J in Court

Date of Hearing:  16 September 2005

Date of Decision: 16 September 2005

Date of Handing Down Reasons for Decision:   17 October 2005

________________________________

REASONS  FOR  DECISION

________________________________

 

Hon Tang JA (giving the reasons for decision of the Court):

1.  The claimant, a Mainlander, who was in Hong Kong under a work visa, was employed under a continuous contract of employment by the defendant.  The contract of employment contained a term whereby the defendant was entitled to transfer the claimant back to the Mainland for employment with an associated company.

2.  By notices dated 17 and 18 December 2001 respectively, the defendant notified the claimant with effect from 18 January 2002 that she would be transfered to a related company in Shekou.  The claimant was pregnant at the time, although the defendant was not aware of it.  The claimant gave the defendant a written refusal on 27 December 2001.  The defendant insisted on her transfer.

3.  On her claim against the defendant in the Labour Tribunal (“the Tribunal”),  the issue was whether in such circumstances, the purported transfer amounted to a termination of her employment which was prohibited by section 15 of the Employment Ordinance, Cap. 57 (“the Ordinance”).  Section 15 of the Ordinance prohibited the termination of such employment except summary dismissal for cause under section 9.

4.  The Tribunal came to the conclusion that the transfer was not a termination of employment.

5.  On appeal, the judge took a different view. 

6.  We dismissed the appeal on 1 February 2005 and gave our reasons on 2 March 2005.

7.  Leave to appeal to this court earlier had been given by Yuen JA on the basis that a point of law of general public importance was involved.  The question being:

“Whether the Defendant’s purported transfer of the Claimant would amount to a termination of employment provided in section 15 of the Employment Ordinance (Cap 57) involves a question of law of general public importance in that it is a common personnel management policy and practice of international and cross-border/group/of companies to transfer their members of staff within companies of the same group in Hong Kong or to transfer their members of staff from Hong Kong to another company outside Hong Kong but within the same group.  The determination of the matter is of general public importance as it would affect the business efficacy as well as the proper protection of the employee’s rights and the employer’s entitlement in Hong Kong.

8.  However, at the hearing of the appeal, it transpired that the point depended on the admission of additional evidence.  We refused leave to adduce additional evidence and the point was not argued before us.

9.  The defendant then applied for leave to appeal to the Court of Final Appeal raising by a proposed Amended Notice of Motion, the following questions which were said to be of great general public importance:

“1.Where the Labour Tribunal (“the Tribunal”) had found (as a matter of mixed law and fact) that a claimant’s employment had not terminated: 
 (1)whether a finding on appeal by the Court of First Instance that the said claimant’s employment had terminated (albeit stated to be based on counsel’s concession) involved a reversal or variation of a determination made by the Tribunal on questions of fact within the meaning of section 35(2)(i) of the Labour Tribunal Ordinance, Cap. 25 (“the Ordinance”); and
 (2)whether the Court of First Instance had jurisdiction to come to the said finding.
   
2.Where the Tribunal had determined following a full trial that there was no termination of a contract of employment on the sole basis that the employer was exercising a contractual right to transfer a claimant, whether the Court of First Instance on appeal, while disagreeing with such determination, ought nevertheless to have remitted the case back to the Tribunal instead of allowing the appeal when:
   
 (1)it was apparent that the Tribunal had not directed its mind as to all the relevant factors or issues of fact in connection with the transfer of the said claimant and had therefore not investigated all such factors or issues, or made all relevant findings of primary fact from which an inference of termination or otherwise could properly be drawn;
   
 (2)the parties were unrepresented at the hearing before the Tribunal;
   
 (3)such hearing was inquisitorial in nature; and
   
 (4)the Court of First Instance was expressly prohibited by section 35(2)(ii) from receiving further evidence on appeal.
   
3.Whether, in the circumstances set out in the paragraphs 2(1) to(4) above, the employer’s right to a fair trial, guaranteed both at common law and under Article 10 of the Hong Kong Bill of Rights and Article 39 of the Basic Law, would be infringed if the Court of First Instance failed or refused to remit the case back to the Tribunal to deal with an issue of mixed fact and law on appeal.  Further, whether the Defendant’s right, to legal representation guaranteed by Article 35 of the Basic Law was infringed in all the circumstances of this case.
   
4.Whether the Court of Appeal’s power to receive further evidence on appeal is overridden by reason of section 35(2) of the Ordinance or is restricted to evidence showing that, had proper investigation been done, the result of the further investigation would have made a difference to the outcome.
   
5.Whether, in a case where a party had raised issue of fact (in this case, the question of whether the Applicant was the Respondent’s employer) before the Tribunal which, in the absence of legal representation, that party had failed to pursue or the Tribunal had expressed no interest, the remittance of the case back to the Tribunal for further investigation of such issue depends on whether its presiding officer had failed to perform his duty when he did not investigate issue in question.
   
6.Whether an employer is precluded from claiming that there was no contract of employment with a claimant if it had previously treated her as an employee for tax and accounting purposes.
   
7.Whether, in the event that there was no termination of a contract of employment upon the giving of a notice to transfer a claimant to work for the employer’s subsidiary, the giving of or failure to withdraw such notice would necessarily constitute constructive dismissal of the said claimant such as would trigger the employer’s liability under section 15(1) of the Employment Ordinance, Cap. 57.
   
8.Whether section 15(1) of the Employment Ordinance requires the employer to maintain the employment of an employee who has given a pregnancy notice until the expiry of the maternity leave if the employee will, or is likely to, become “not lawfully employable” in the meantime.”

10.  We refused leave and dismissed the summons dated 29 April 2005 and the amended summons dated 13 September 2005 seeking leave to file and served an Amended Notice of Motion on 16 September 2005 with costs.  We now give our reasons. 

Question 1

11.  This does not involve a question of great general public importance.  The most which could be said of the point, is that the judge and this court were wrong in mistaking a finding of fact as a question of law.  Neither the judge nor this court had purported to extend the jurisdiction of the judge under section 35(2)(i) of the Labour Tribunal Ordinance, Cap. 25.  Nor did the point depend solely on counsel’s concession.

Question 2

12.  Whether the case ought to be remitted to the Labour Tribunal must depend on the circumstances of the case.  It is an exercise of judgment akin to an exercise of discretion.  This cannot possibly involve a question of great general public importance.

Question 3

13.  It is difficult to understand how this point can possibly arise.  Rightly, Mr Mok did not press this point.

Question 4

14.  Again this cannot arise.  Section 35(2) of Cap. 25 makes it quite clear that on an appeal from the Tribunal, the Court of First Instance might draw any inference of fact but that it may not reverse or vary any determination made by the Tribunal on a question of fact or to receive further evidence.  An appeal to the Court of Appeal required leave which should only be granted if this court considers that a question of law of general public importance is involved.  There was an application to this court for leave to adduce additional evidence which we refused.  The application did not satisfy the Ladd v Marshall requirements.  In any event, we refused leave in the exercise of our discretion, even if, which we did not accept, we had the power to admit further evidence.

Question 5

15.  Again, whether the case should be remitted would depend on the circumstances.  The judge found it was unnecessary to do so.  We agreed with the judge.  This cannot be a question of great general public importance.

Question 6

16.  This cannot possibly be a point of great general public importance.

17.  In the circumstance of this case, it is clear that it was open to the judge to find there was a contract of employment with the claimant.  Indeed, that was also the decision of the Tribunal.

Question 7

18.  This again cannot possibly be a question of great general public importance.

Question 8

19.  This question does not arise because there was no evidence that the claimant was, or was likely to, become “not lawfully employable” in the meantime. 

Additional question

20.  In the defendant’s skeleton submission, Mr Mok raised a further question namely whether section 23(2) of the Labour Tribunal Ordinance, which prohibited a barrister or solicitor to appear before the Tribunal for a party, infringed Article 35 of the Basic Law.  This point was not raised before the judge nor before us.  We do not believe that this is a point which ought to be permitted to be raised for the first time in the Court of Final Appeal.

21.  In any event, as Reyes J said in New World Development Company Limited v The Stock of Exchange of Hong Kong Limited [2005] 2 HKC 506, at paragraph 160:

“For the purposes of this case, it is unnecessary definitively to decide whether the Small Claims and Labour Tribunals are within the terms of Article 35.  Even if it is assumed that they are, if by no means follows that their procedures violate Article 35”

22.  Here, there is no evidence that the defendant wanted legal representation.  As Reyes J has pointed out and section 10 of the Labour Tribunal Ordinance, Cap. 25 made clear, the Tribunal may of its own motion or on application by one or more parties before it transfer cases to the District Court or the High Court.  So, had the defendant wanted legal representation it could have applied for a transfer.

Discretion

23.  In any event, as a matter of discretion, we would have refused leave.  Judgment has been entered against the defendant for the sum of $53,187.50.  Employment disputes involving small sums should be disposed of speedily and inexpensively.  There have already been 2 appeals.  The costs involved in a further appeal to the Court of Final Appeal would be totally disproportionate to the amount at stake.  There is great disparity in the resources of the parties.  The defendant is part of a state owned group.  The claimant’s monthly wage was $18,500.  It will be unfair to expose the claimant to the additional costs of an appeal, since, even if she should obtain an order for costs in her favour in the Court of Final Appeal, on taxation, she is unlikely to recover all her costs.

(Wally Yeung)
Justice of Appeal
(Robert Tang)
Justice of Appeal
(D. Yam)
Judge of the Court
of First Instance

Mr Lawrence Ng, instructed by Messrs Y T Chan & Co., for the Claimant (Respondent).

Mr Johnny S L Mok, instructed by Messrs Lo & Lo, for the Defendant (Applicant).

Appeal by the Defendant to the Court of Final Appeal. Appeal dismissed. Please refer to the appeal judgment of FAMV30/2005

44526-EN-2005-03-02

SUN MIN v. HONG KONG MING WAH SHIPPING CO LTD

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          CACV 37/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 37 OF 2004

(ON APPEAL FROM HCLA 9 OF 2003)

______________

BETWEEN

SUN MIN (孫敏)Claimant
(Respondent)
and
 HONG KONG MING WAH SHIPPING CO. LTD
(
香港明華船務有限公司)
Defendant
(Appellant)

______________

Before:  Hon Yeung and Tang JJA and Yam J in Court

Date of Hearing:  1 February 2005

Date of Decision:  1 February 2005

Date of Reasons for Decision:  2 March 2005

 

____________________________________

REASONS  FOR  DECISION

____________________________________

 

Hon TangJA (giving the Reasons for Decision of the Court):

1. On 1 February 2005, we dismissed the defendant’s appeal.  We indicated that we would give our reasons in due course and this we now do.

The facts

2. This appeal concerns the claimant’s claim against the defendant under Part III of the Employment Ordinance (“the Ordinance”).

3. If the claimant was employed under a continuous contract of employment by the defendant at the material time, she was entitled to maternity leave under Part III.

4. Section 15 of the Ordinance prohibited the termination of such employment except under section 9, namely, summary dismissal for cause.

5. So the principal issues between the claimant and the defendant were :

(1)was the claimant employed under a continuous contract of employment with the defendant,
  
(2)had her contract been terminated, and
  
(3)if so, whether it had been terminated in accordance with section 9.

6. It was the defendant’s case that the contract of employment contained a term whereby it was entitled to transfer the claimant back to the Mainland for employment with an associated company.  The presiding officer found that there was indeed such a term (“the term”). 

7. By notices dated 17 and 18 December 2001 respectively, the defendant notified the claimant that with effect from 18 January 2002, she would be transferred to a related company of the defendant in Shekou, namely, Shekou Ming Wah Shipping Company Ltd (“SKMW”).  SKMW was a subsidiary of the defendant.  The presiding officer also found as a fact that the defendant was unaware of the pregnancy when the decision to transfer was made.

8. The claimant refused to accept the transfer, and after taking advice from the Labour Department, she gave the defendant a written refusal on 27 December 2001.  The defendant, however, insisted on her transfer. 

9. On 20 March 2002, the claimant commenced her claim against the defendant in the Labour Tribunal.

The defendant’s case on appeal

10. There was a division of labour between Mr Alan Hoo SC and Mr Johnny Mok (leading and junior counsel for the defendant, respectively). Mr Hoo addressed us on paragraph 1 of the notice of appeal as well as the grounds in the supplementary notice of appeal whereas Mr Mok addressed us on paragraphs 2, 3, 4 and 5 of the notice of appeal.

11. The argument of Mr Hoo can be summarised as follows.  First, Deputy Judge Poon (“the Judge”) was wrong in concluding that there was a contract of employment between the claimant and the defendant.  He should have found that there was a contract of employment between the claimant and “China Merchants Holdings Co Ltd, or the China Merchants Group, a Mainland State Enterprise”.  Secondly, that if there was a relevant contract of employment between the claimant and the defendant within the meaning of section 15(1), the proposed transfer of the claimant “being a state official sent to work in Hong Kong (see endorsement on claimant’s exit pass) to SKMW, being a subsidiary of the defendant, did not constitute a determination of the claimant’s employment”.

12. Mr Mok’s submission can be summarised as follows.  The defendant had not terminated the claimant’s employment actually or constructively but that “by refusing to be transferred, or report to work, the claimant had wilfully disobeyed a lawful and reasonable order of an employer, or had misconducted herself or had been habitually neglectful in her duties, or otherwise on other grounds under section 9 of the Employment Ordinance such as would entitle the claimant’s employment to be terminated”.

The decision of the court

13. We will deal with Mr Mok’s arguments first.  We do not believe it is now open to the defendant to argue that the claimant’s employment had been terminated by the defendant under section 9 of the Ordinance.  That was not the defendant’s case before the Labour Tribunal.  Nor was the matter so argued before the Judge.  It is now too late to take this point.  Moreover, we do not believe the point is sound. 

14. According to Mr Mok, the notices of transfer were not notices of termination.  There was no termination until or unless the claimant actually reported for duty at Shekou.  But because she failed to do so the defendant was entitled to terminate her contract summarily.  We do not believe that can be right.  The defendant had shown by its conduct that the claimant was not permitted to continue to work for the defendant after 31 December 2001.  We believe it is clear that it was the service of the notice of transfer together with the defendant’s insistence on the transfer notwithstanding the notice of pregnancy which amounted to a termination of the contract of employment between the claimant and the defendant. 

15. We turn to deal with Mr Hoo’s submissions.  Was there a continuous contract of employment between the claimant and the defendant?

16. In aid of this argument, by summons, the defendant sought admission of new evidence.  Mr Hoo argued that on the basis of the new evidence, there should be a new trial.  He also argued that having regard to the inquisitorial nature of the proceedings in the Labour Tribunal, the presiding officer ought to have investigated into the question whether or not there was a contract of employment between the defendant and the claimant.

17. But that was not a point which was raised in the statement of defendant.  Indeed, in the statement of defendant the “date of first employment of claimant;” was given by the defendant as 14 April 1998.  It is true that in the document which was annexed to the statement of defendant, it is possible to say that the fact that the claimant was on secondment to Hong Kong was raised.   Further, as recorded in the oral reasons given by the presiding officer (p. 141 of the transcript) at the first hearing, one of the defences raised by the defendant was that the claimant was not the defendant’s employee.  However, that defence was not pursued.  Instead, the defendant argued that the claimant had not been dismissed by the defendant and that the transfer to Shekou was an internal transfer in accordance with the term.

18. The defendant argued that having regard to the inquisitorial nature of the proceedings in the Labour Tribunal, the Labour Tribunal ought to have enquired into this question.  We were referred to passages in Chan Suk Bing Angie v. Harbour Phoenix Ltd & Anor [1992] 2 HKC 459 and Leung Wan Kee Shipyard Ltd v. Lik Shau Foo & Ors [1995] 3 HKC 229 on the duty of the Labour Tribunal to investigate.

19. The power or duty to investigate must be treated with common sense.  The extent of investigation must depend on all the circumstances.  As Le Pichon J (as she then was) said in Re Sea Wave Hair Design Holdings Ltd [1999] 4 HKC 409 at 412F, the Labour Tribunal was meant to provide a summary and speedy resolution to claims within the Ordinance.  In the circumstances of this case, we do not agree that the presiding officer had failed to perform his duty when he did not investigate a point which had been abandoned or not pursued by the defendant.

20. There was nothing in the evidence before the presiding officer which should have prompted him to investigate further into this issue.  The fact that the evidence before the presiding officer was insufficient to make out a case on this point is reinforced by the fact the defendant sought leave to adduce additional evidence.  Mr Alan Hoo accepted that such additional evidence was required before he could make out a case that the contract of employment was not made between the defendant and the claimant.

21. We have refused permission to adduce additional evidence.  We said we would give our reasons later.  The reasons can conveniently be given here.  First, there was no attempt to seek leave to adduce additional evidence before the Judge.  If this was a point which was open to the defendant to take on appeal from the Labour Tribunal, the defendant ought to have taken it on appeal to the Court of First Instance.  That had not been done.

22. Secondly, section 35(2) of the Labour Tribunal Ordinance provides that the Court of First Instance may not “receive further evidence”.  It may be that if an appeal is on the ground that the presiding officer ought to have investigated into a matter, it is possible for evidence to be admitted to show that had the proper investigation been done, the result of the further investigation would have made a difference to the outcome.  Outside this limited purpose, we do not believe further evidence can be received.  Even treating the application on that basis, that not having been done before the Judge, we do not believe it is a right to allow the defendant to do so on appeal to the Court of Appeal.

23. Thirdly, the evidence is sought to be adduced to show first, there was no contract of employment between the claimant and the defendant.  Secondly that the contract of employment was between the claimant and China Merchants Group (“CMG”).  Thirdly that the transfer was not a termination of any relevant contract of employment between the claimant and the defendant.  As already noted, the defendant is seeking a trial de novo.

24. In the statement of defendant, there was no denial that there was a contract of employment between the claimant and the defendant.  In fact that was well supported by the evidence before the presiding officer.  Such evidence included information furnished by the defendant to the Inland Revenue Department dated 17 December 2001 whereby the defendant notified the Inland Revenue Department that the claimant’s employment with the defendant would cease on 31 December 2001.  Mr Hoo accepted that for tax and accounting purposes, the claimant was treated as an employee of the defendant.

25. Both before the Labour Tribunal and before the Judge, it was not disputed that the claimant was employed under a continuous contract of employment with the defendant, see paragraph 21 of the Judge’s judgment.  Indeed, it was conceded by counsel then acting for the defendant before the Judge, that the claimant’s employment came to an end as a result of the notices of transfer.  We believe the concession was rightly made.  So we would not permit the defendant to argue that there was no continuous contract of employment or that there was no termination of the claimant’s employment.

26. The defendant also took the point that this type of employment was special in that it involved so-called “internally transferred personnel” from the Mainland to Hong Kong of personnel who had joined a state-owned enterprise or group such as the CMG in the present case.  It was said although their terms of employment may differ from one work unit to another, they were subject to the terms of employment imposed by the group for internally transferred personnel. 

27. However Mr Hoo conceded that such state-owned enterprise could by better arrangement of their affairs, ensure that no contract of employment existed between its personnel and its independent work units.  But here, as noted, for accounting and tax purposes, the claimant was treated as an employee of the defendant.  In such circumstances, we did not think it right to permit additional evidence on appeal, even if we have the power to do so.

28. A further argument raised on behalf of the defendant is that the Judge was not entitled to interfere with the presiding officer’s finding of fact that the transfer did not amount to a termination of the claimant’s contract of employment.

29. This point was raised by the claimant in paragraph 7 of her amended application for leave to appeal on point of law dated 19 March 2003 :

“7.  The learned Presiding Officer erred in law in failing to hold that the alleged transfer of the Claimant to work for a separate legal entity in the PRC necessarily involves and/or is dependent upon the termination of the Claimant’s employment in Hong Kong with the Defendant, which termination is admitted by the Defendant in the Notification.”

No objection was taken to this point before the Judge.  Rightly so.  The conclusion of the presiding officer that the notices of transfer did not amount to a termination of the claimant’s contract of employment was either a question of law or a question of mixed law and fact. 

30. The legal consequence of the notice of transfer was the subject of the appeal before the Judge.  Indeed as we have said it was conceded before the Judge that as a result of the notice of transfer, the claimant would no longer be employed by the defendant but instead would be employed by its subsidiary company in Shekou.  The correct conclusion from these facts which were found by the presiding officer is that there had been a termination of the claimant’s contract of employment with the defendant.

31. Mr Hoo submitted that because section 15(4) created a criminal offence, it should be construed strictly in favour of the employer.  The criminal sanction was imposed to better protect the employee and our interpretation should not undermine that.  Anyway, the fact that the decision to transfer was made when the defendant was unaware of the claimant’s pregnancy is irrelevant to a claim for compensation under section 15.  Nor do we think we should give any strained interpretation to continuous contract of employment so as to exclude from its ambit a transfer to a subsidiary company outside of Hong Kong.  Mr Hoo referred us to section 32E in Part VIA of the Ordinance.  But this section does not apply to claims made under Part III.  The Judge had referred back to the Labour Tribunal the claimant’s claim for severance payment.

32. As for Mr Hoo’s point that because of immigration control, it might become illegal for an employer to continue to employ a pregnant employee whose permission to remain in Hong Kong has expired.  Whether this would amount to a defence to a criminal prosecution is unnecessary for us to decide.  But there was no evidence before the Labour Tribunal to show that it would have been illegal for the defendant to continue to employ the claimant.  Nor was the point taken before the Judge.  Anyway, the point is fact sensitive.  It is too late to seek a new trial so that the point could be taken. 

33. We do not need to deal with the Judge’s decision on constructive dismissal which, as the Judge said, was strictly speaking not necessary for his decision. 

34. For the above reasons, we believe the Judge’s conclusion that the defendant had terminated a continuous contract of employment with the claimant, after receipt of the notice of pregnancy, otherwise than in accordance with section 9 was correct.  Hence, the appeal and the application to adduce fresh evidence were dismissed with costs.

(W. Yeung)
Justice of Appeal
(Robert Tang)
Justice of Appeal
(D. Yam)
Judge of the
Court of First Instance

Mr Lawrence Ng, instructed by Messrs Y.T. Chan & Co., for the Claimant (Respondent)

Mr Alan Hoo SC and Johnny S.L. Mok, instructed by Messrs Lo & Lo, for the Defendant (Appellant)